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Gulfport (GPOR) Q2 Earnings Beat by a Whisker, Decline Y/Y

Gulfport Energy Corporation GPOR delivered a comprehensive beat in second-quarter 2019, with earnings and sales surpassing estimates. The Oklahoma-based company reported second-quarter adjusted net earnings per share (EPS) of 21 cents, a penny above the Zacks Consensus Estimate, backed by higher-than-expected natural gas realizations. Precisely, natural gas realizations (including derivatives impact) came in at $2.20 per thousand cubic feet, beating the Zacks Consensus Estimate of $2.06. However, the bottom line was below the year-ago EPS of 33 cents a share amid weaker y/y commodity price realizations and higher costs.

Revenues of $459 million surpassed the Zacks Consensus Estimate of $310 million. The top line also surged from the year-ago figure of $253 million.

Production & Realized Prices

Gulfport’s total oil and gas production increased to 1,358.9 million cubic feet equivalent per day (MMcfe/d) from 1,330.3 MMcfe/d recorded in the corresponding period of last year. Of the total output, 90.2% comprised natural gas. Gas production from the Utica Shale declined 1.4% y/y to 95,616 MMcfe. Nearly 85.6% of its output came from the Utica acreage. Output from SCOOP came in at 27,149 MMcfe, higher than the year-ago level of $22,500 MMcfe.

Average realized natural gas oil price (before the impact of derivatives) during the second quarter was $2.02 per thousand cubic feet, lower than the year-ago period’s $2.15. Average realized natural gas liquids price was 45 cents per gallon, down from the year-ago quarter’s 71 cents. Gulfport fetched $56.85 per barrel of oil during the quarter, down from the year-ago figure of $66.26. Overall, the company realized $2.33 per thousand cubic feet equivalent in the quarter vis-a-vis $2.67 a year ago.

Costs, Capex and Balance Sheet

Total expenses in the quarter under review amounted to $242.1 million, higher than $238.9 million in the prior-year period. This uptick is mainly attributed to higher production taxes, and depreciation and midstream gathering/processing charges incurred in the reported quarter. Depreciation costs scaled up 2.4% from the prior-year quarter to $124.9 million.

In the reported quarter, Gulfport spent $112.8 million on drilling and completion. As of Jun 30, the natural gas-weighted energy explorer had approximately $20.8 million in cash and cash equivalents. Gulfport had a long-term debt of $2,198 million, representing a debt-to-capitalization ratio of around 37.8%.

2019 Guidance Retained

Gulfport reiterated its 2019 guidance that was unveiled in January. The upstream player expects 2019 capex in the band of $565-$600 million. It projects 2019 production within 1,360-1,400 MMcfe/d. The company expects free cash flow to exceed $100 million.

Zacks Rank & Key Picks

Gulfport currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the energy space are Oasis Midstream Partners LP OMP, TC PipeLines, LP TCP and Dril-Quip, Inc. DRQ, each carrying a Zacks Rank #2 (Buy).

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